Pulling Out of the Bush Dive
Right-wingers have been bashing Obama for “losing” millions of jobs–and have even found ways to bash him further still for the fact that only 11,000 jobs were lost in November. As if there was no such thing as “last year,” or even sometimes “last month.”
A quick study of the chart above (Bush months in red, Obama’s in blue) tells the story in undeniable detail: Bush drove us into one of the worst recessions in memory, with unimaginable levels of job losses totaling more than 700,000 per month by the time he left office. Obama came in, quickly instituted a stimulus package and–purely by coincidence, of course–the trend immediately reversed itself. November job loss numbers were only barely negative, promising possible job growth for December or early 2010. I would not be at all surprised if the new growth turns out to be steady.
There is no way to look at that chart and blame Obama for anything except reversing a horrific hemorrhage of jobs that Bush saddled the nation with. At best, if you want to insist that the turnaround, timed exactly upon Obama’s entrance and his promised deployment of a stimulus package, was nothing more than an incredible coincidence, then you still can’t blame him for anything–unless you want to contend that Obama has damaged job growth but that has only been overcome by a delayed economic miracle that Bush somehow quietly enacted when no one was paying attention. But realistically, this kind of result just doesn’t happen by chance. Obama clearly had a strikingly positive effect on employment. He hasn’t fully repaired the damage done by Bush, but he has clearly turned it back onto the right course, and was correct to claim ownership of that early this year (when it was far from certain that the numbers would improve as much as they have).
In contrast, look at the chart of job gains and losses starting at the same point near the end of Clinton’s second term (in blue), and then where Bush took it afterwards (in red):
Not quite as clear-cut as the previous chart, but one can see a pattern: Clinton handed over a bad economy, but it was only middling-bad. Keep in mind that Bush signed his huge tax boondoggle for the wealthy in early June 2001 (after it passed through Congress in May)–exactly at the time when job losses became steady and notably increasing. It took until late 2003 before sustained job growth returned. Now it looks like Obama will achieve the same thing in just over one year–not two and a half–despite being handed a death spiral which made the economy Clinton handed Bush seem positively robust.
Contrast the Clinton-Bush chart with the stark shape of the job losses under Bush and then Obama, and it’s inescapable: had Obama not come in and turned things around, we could have been looking at ten million more jobs lost. He turned that trend around, but fast.
And for this, right-wingers attack Obama for “losing” all of those jobs. It’s as if Bush put the national aircraft into a deep, steep dive, then Obama took control and immediately started to pull us up, and we’re now leveling out, much safer now–and right-wingers are thrashing Obama for being at a low altitude.
I shudder to think what would have happened had McCain won and vetoed anything except yet another tax cut for the rich. Yeah, that would have worked.
That’s an impressive graph, because just to the left of it are blue sky scrapers created by Clinton. If Obama gets some real traction, and is able to implement some demand side economics, particularly card check and real insurance reform, he could have some gutsy job growth.
If Democrats could use that progress to install more true-blue democrats, then health reform could follow up with single payer. Single payer would send employment through the roof because its efficiencies are so much greater than anything we got now: creating competitive advantage for American industry and releasing massive purchasing power for American workers.
By being driven towards concentrating wealth and power, Republicans take spending power out of the economy every time they shift it towards the rich, starving it of demand and causing employment to shrink.
That concept seems simple to me. Some good Democratic politicians should have plenty to run with here.
Enough shift in resources away from concentration would also improve our politics (by reducing gravitational pull away from big money and wallstreet) and reducing corruption.
It’s a little less impressive once you go back further and see that Clinton had taller skyscrapers before the chart above shows. While Clinton had stellar job growth, the concept is, what kind of economy did Clinton hand off to Bush? In this case, the argument could be made that the trend of fewer jobs created and more lost began before Bush took office. The thing is, the numbers from Clinton to Bush pale in comparison to those between Bush and Obama–the latter numbers are incredibly stark and telling.
The Clinton-Bush numbers took a much longer period of time to resolve, giving more time for external factors to have an effect. How much of the fall was due to lack of confidence in Bush? How much was due to his tax cuts? What effect did 9/11 have? Can a trend begun a year before Bush came to office truly continue unimpeded for 3 years into the Bush administration?
The answers are, at least some and maybe a lot; much stronger; and of course not. Clinton left Bush a teetering economy, not one in freefall; Bush had quite a while to have a positive effect. However, soon after he came in to office, employment plummeted for one month–it’s not so easy to dismiss that or to ignore the possible lack of confidence in Bush that it reflected, especially since the job losses were widely spread out, hit manufacturing hard, and nothing else at that point really explained the sudden drop.
Next, note how the numbers were in flux before Bush came in to office–but once he was in, they began a steady, almost measured decline, especially after the passage of Bush’s “economic relief.” One cannot always expect a good plan to pay off immediately, but there should be some expression of relief, confidence, or encouragement in the market–but after Bush entered office and passed his tax plan, jobs started a distinct, regular downward trend. That’s telling of a negative effect, not of what Clinton did a year earlier.
Finally, Bush had tons of time to turn things around. He could have instilled confidence, run a stimulus package, talked the economy up–you know, he could have done things. Instead, rather than talking up, he actually talked it down–purposefully playing up bad news so he could justify his tax cuts. And while the wealthy were undoubtedly excited about them, it really wasn’t too hard to see that they were worthless as a way to stimulate job growth. That was never their purpose, after all.
I think it’s useful to think in terms of capital investment.
The 90s featured a lot of misinvestment but the general trend was towards making us more productive, with the twin GUI (Windows 3 & 1995) and internet (1995-2000) booms having a material impact on the service and industrial sectors. The internet has also greatly facilitated aggressive offshoring of work, which tends to increase productivity at the cost of balance of payments.
The Bush crew apparently didn’t understand this. They ramped up military spending (largely total wastage), cut taxes (which ended up in higher land values), lowered interest rates (which ended up in higher land values), allowed lending standards to be lowered (which ended up in higher land values), and allowed the massive fraud of speculative buying to continue (which ended up in higher land values) until the wheels fell off in 2007.
If Japan can tell us anything it’s that higher land values are a BAD thing not a GOOD thing. Land has no cost of production so every dollar we pay in ground rent is money taken from productive members of society to rentiers who get something for nothing.
NCLB — resulted in worse public schools, Medicare Part D was simply a price-support package for Big Pharma. The wars have had us piss away around a trillion — trillion! — TRILLION FUCKING DOLLARS that we’ll probably not see any return on, other than broken lives and disability payments for the rest of the century.
A trillion is a lot of money. Korea produces more cars than any nation in Europe, save Germany, same with steel, is number 1 or 2 in shipbuilding, flat panel displays, cell phones, and a host of electronics. Korea has 50 million people living a middle class existence, yet Korea’s economy is usually rated at just UNDER a trillion in GNP.
Bush basically gave anywhere from five to ten trillion dollars to the top 1% of our society (that’s my back of the envelope calculus from a year ago: with no bid contracts, tax cuts, sweet medicare deals for drug companies etc…).
This basically resulted in starving the economy of demand, which he was able to mask with cheap loans from China. I’m sure the Republicans shaping policy knew that a crash would come, but I’m guessing they had it scheduled for after the Democrats took office in 2009. It came almost exactly a year too early.
My take on the Clinton economy is that it was due for a cyclical slow down. The dot com implosion was the result of too much money on the ‘supply-side’ of the table. What made Clinton’s economy happen, in part, was that he raised taxes. And he would have liked to have raise them more but the Republicans wouldn’t let him. Clinton proved that predictability and stability encourages investment and growth much more so than low taxes.
The way you stop a bubble from bursting is to let the air out of it slowly, or not let it get in there in the first place. That’s what high taxes do. When you have to much money on the supply side of the ledger, relative to demand, investors generally can’t get good returns because demand is too small. So they start pushing for deregulation to get at investment areas that they’ve been walled off from. They also flood into the few areas that offer decent returns – like a new technology which brings with it its own latent demand. That causes an investment bubble.
I think we were do a slow down at the end of the Clinton era, but higher taxes would have kept the bubble to a minimum. The tendency towards deflation at the end of the Clinton era was the signal that we already had supply side saturation. The dot.com bubble confirmed it. The proper response to the post-Clinton recession was demand-side economics, which means giving working people more money and/or bargaining power which Bush could never do. So he pored the coals on supply-side economics and borrowed money from China to hide it’s effects.
The problem with all of this is that it is the job of the wealthy to invest, as Troy points out, in productive activities. The laws were set up to align private motives (greed) with socially constructive behavior: the laws attempt to force wealthy people to invest in productive things. What Bush taught investors is that if they invest in politicians the return on investment is even higher than investing in productive assets. Bush, then Obama, just gave the wealthy more money. And that is a very bad precedent.
The problem is that wealth is concentrated now, its created a kind of political black hole where it exerts so much gravitational pull that no politics can escape its effect. Obama has a very tough job.